Poor electricity costs Nigeria N10tn yearly, says World Bank

The unreliable power supply in Nigeria is causing huge economic losses, estimated at N 10.1tn yearly, the World Bank has said.
The World Bank, in a new report, noted that transition from a publicly-owned to largely privately-owned power market, which began in 2013, did not bring the expected outcomes.


“The sector is under severe stress,” it said, adding that the causes for the stress were interlinked and the result of key stakeholders falling short of their expected contributions for achieving sector turnaround.


The report said this had led to a lack of trust between key stakeholders and among the general public with respect to power sector improvement.


It said a credible reform process would require an integrated approach of resolving regulatory and policy failures, and establishing a credible and fiscally sustainable financing plan by the Federal Government to ensure full funding for tariff shortfalls, among other measures.
The World Bank described the power sector , particularly the distribution segment , as “operationally inefficient with high losses ”.


It said, “Power sector recovery is critical for the Federal Government of Nigeria ’s response to the COVID -19 outbreak.


“The sector recovery efforts focused on ensuring regulatory and policy predictability providing incentives for efficiency in operations while enforcing payment discipline across the supply chain are critical for maintaining the ‘ lights on’ through continued generation of electricity .”

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The report said the efforts to reduce the sizable public expenditures for tariff shortfalls would create critical fiscal space for the government to finance a pro-poor economic stimulus package to protect the poor and vulnerable from the crisis and to support the economy to recover.


It said during the recovery period , improving power sector performance would be central to unlocking economic growth, particularly in the non-oil sectors of manufacturing and services.


“The annual economic losses caused by Nigeria’ s unreliable power supply have been estimated at N10.1 tn or about two per cent of GDP, ”the World Bank said”.


According to the report, Nigeria ranks 131 st with respect to the overall ease of doing business in the World Bank’s Doing Business 2020 , with getting access to electricity ranked as one of the major constraints.

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